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John Deere Company is increasingly becoming a global force and the outlook of its representation across the world clearly demonstrates this. The company’s main location is in Moline, Illinois in the United States which serves as its administrative center. However, the company has numerous manufacturing factories spread out throughout Southeastern and Central parts of the United States. As of 2006, John Deere Company had more than 45,000 employees working in more than 27 nations worldwide. The company has a large presence in Europe, Asia, North and South America, as well as Africa. A number of the countries where John Deere Company has presence include United States, Canada, France, Spain, United Kingdom, Australia, China, Turkey, Brazil, India, Morocco, South Africa, Italy, and Germany among others. John Deere Company has strategically positioned itself in these countries in order to access new market and reduce transportation costs associated with heavy agricultural equipments (Deere & Company, 2011).
Apart from factories that are found in various countries across the globe, John Deere have a number of subsidiary and affiliate companies such as Ningbo Benye Tractor and Automobile Manufacture Company Limited located in Ningbo, China and primarily deals with low HP tractors. The company also partners and pools resources with a number of companies and dealers around the world which assist in providing marketing, sales, and after-sale services to the John Deere customers. For instance, John Deere partners with Hitachi Mining Company in order to provide sale and services to the Hitachi Mining Equipment in the North American region. John Deere also partners with South Africa Company, Bell Equipment with an aim of getting articulated dump truck technology. Bell Equipment on the other hand is allowed to make Deere backhoe loaders for the international market. As part of the deal, Bell Equipment also supplies Deere motor graders, skidders, crawler dozers, and wheel loaders in the South African market (Deere & Company, 2011).
Consumers in the global market recognize the brand and products of John Deere as not only durable but also reliable brands. The company has successfully positioned itself in the global market as the leading provider of agriculture, commercial, forestry, and construction equipments. According to Deere & Company (2011), the company’s core mandate is to uphold the core values of the company’s founders which include quality, commitment, integrity, and innovation. The company asserts that even as its employees’ work each day towards achieving these ideals, its values are also part and parcel of the company and would be found in its products, services, as well as opportunities offered by the company. For John Deere Company, after-sale service and parts are core business practices that contribute greatly to the bottom line. John Deere dealers understand that a key factor in small scale and large scale farmers’ buying decision is to avoid any breakdown in their equipments especially during the harvesting seasons. It is against this background that John Deere Company has labored to make self-diagnostic electronics that alerts the dealer when a piece is about to breakdown. The company therefore has a core competency which not only ensures that labor costs are kept low and schedule improved, but also helps dealers satisfy their customers’ expectations.
Self Proclaimed Strategy for Success
John Deere Co., core business is to assist farmers, constructors, foresters, and business people to succeed in their endeavors. The company asserts that it is committed to help these groups of people succeed. While John Deere Company extends this commitment across the globe, it also understands that six regions are particularly of great importance to its success. The company focuses on United States, Canada, China, Brazil, Russia, India, and Europe. It believes that these regions will contribute about 3/4 of the future growth of the world since they are the key areas where its success lies. The company states that “…because of its past, its passion, and its purpose for helping you become more profitable and productive, it is uniquely positioned to be the equipment supplier of choice” (Deere & Company, 2011).
Analysis of John Deere Company
Comparisons to another company in the Industry
John Deere versus Case New Holland
Like John Deere Company, Case New Holland (CNH) is an international company that deals with the agricultural, construction, forestry and commercial equipment industries. Just like John Deere Company, CNH has a global presence in all the continents and its scope includes manufacturing, integrated engineering, marketing, and distribution. Case New Holland has its operations divided into three core business segments: financial services, agricultural equipment, and construction equipment. As of 2010, Case New Holland had 40 facilities across the world manufacturing its products while more than 11,000 dealers and distributors were distributing and providing services in about 170 countries around the globe, notably in the United States and Canada, South America, Africa, Europe, Asia and Oceania (CNH, 2011).
Despite this wider representation across the globe and in major markets, Case New Holland still ranks below John Deere Co. in the agricultural and construction industries. In terms of capital structure, John Deere Co. still leads other key industry players including Case New Holland, Kubota, and Caterpillar. As of 2008, John Deere Co. had a total capital of $29,008.7 while CNH had a total capital of $17,811. However, John Deere Company had 77.5 percent and 22.5 percent in debts and equity respectively. Case New Holland on the other hand, had 63.8 percent and 36.2 percent in debts and equity respectively (Dolan, Plunkett, Rozell, Schar, & Zuo, 2010). In terms of profitability, John Deere Company still leads other industry players. For instance, John Deere Company had a gross profit margin of 31.2 percent in 2009. Following closely was Caterpillar which had a gross profit margin of 24.9 per cent. Case International came third with 21.8 percent in gross profit margin. While John Deere Company reported an 11.0 percent in pre-tax profit margin in the same year, Case International reported a 0.2 percent. In addition, Case International reported negative figures in its net profit margin, return on equity, return on assets, as well as return on invested capital. On the other hand, John Deere Company posted positive figures in net profit margin, return on equity, return on assets and return on invested capital, which were above 5.0 percent (Dolan et al., 2010).
SWOT Analysis: Strengths
One of the strengths of John Deere Company lies in its product quality. Being the market leader, backed by a strong financial position, the company has been able to produce quality and up-to-date equipments which satisfy the needs and expectations of its customers. For instance, the development of self-diagnostic electronics in its equipments has meant that its dealers and distributors do not sell faulty equipments to their customers.
John Deere Company can only keep up its upward growth since its market leadership has enabled it to build a strong customer base that trust the company’s products and services. Customer loyalty is directly related to customer service and how satisfied the customer is with the service. Unique customer service is perhaps one of the greatest strengths of the company that has ensured its consistent growth and expansion. John Deere’s market leadership has enabled the company to earn a good reputation in the market which has been significant in increasing its customers’ devotion. However, its timely and excellent customer service which includes after-sales and parts services as well as appropriate response to customers’ complaints is a strength that the company has exploited to increase its customer loyalty.
SWOT Analysis: Weaknesses
Pricing is a key factor in customer attraction and retention. John Deere’s products are highly priced thus blocking a number of potential customers who may want to buy directly from the dealer or distributors of the equipments. This group of customers is forced to purchase second-hand because of the high prices of the new products.
Struggle to Meet Demand
While the company boasts of having a big market share, it may struggle to meet the high stipulations and prospects of its customer. Being a market leader and a reputable international company, it is more likely that the company will continue to attract more customers across the globe. However, meeting the diverse needs of all these groups may be challenging.
SWOT Analysis: Opportunities
While John Deere Company has been doing well in the United States and Canada markets compared to other parts of the world, opportunities exist in the international market for continued growth. For instance, South American countries offer better markets since there is increased machinery imports and demands, expansive arable lands, increased yields in corn and soybeans in recent times, and low-interest on loan incentives for tractor purchase. This and other regions provide new markets that the company can compete in.
Development of New Technology
The demand for renewable energy has provided a number of opportunities that the company can pursue in line with its growth objectives. For instance, the company has the capacity of manufacturing wind turbines for sale as well as for its own use in its facilities.
SWOT Analysis: Threats
To remain a market leader, John Deere Company must continue to remain competitive. However, as the number of players in the agricultural and construction industries continues to rise, the company will always feel the pressure from its competitors, especially in new markets where it does not have strong customer loyalty. Moreover, with the opportunities for international expansion, the company may risks from the threats of switching its concentration to new markets.
Commercial agriculture is threatened by a number of factors including natural disasters, poor weather, poor yields, and poor infrastructure, among others. These factors directly determine how customers buy agricultural equipments. These therefore remain some of the threats that agricultural equipment companies like John Deere must contend with.
The economic turbulence like the one experienced in 2008 continues to affect businesses across the globe. The success of John Deere Company depends not only on individual country’s economy but also on world’s economy and any threats to the stability of these economies will directly threaten the company. Tax rate fluctuations as well as government regulations are also factors that would threaten the company’s expansion especially in new markets.